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Definition and the measure of aid dependency
[edit]Definition
[edit]There has been no unified definition of "aid dependence" in the world. Sobhan defined that aid dependence is a state of mind, the recipient country loses its ability to develop and think, thus giving up control over aid.[1] There is also a definition states that a country is aid dependent when it is unable to perform many basic functions of government, such as providing basic public services like schools and clinics, without foreign aid. [2]
The measure of aid dependency
[edit]A way to identify aid dependency is to determine the percentage of aid funds of government budget expenditure (aid/ budget expenditure). Another way to measure dependency is to calculate how much of the Gross National Income that is made up of aid flows(aid/GNI).[2]
The problems of aid dependency
[edit]The dependent recipient countries cannot operate normally without the support of external aid, and their development plans and policies are unable to be put into practice, even if the degree of dependence is slight.[3] 15-20% is considered to be the tipping point for aid to begin to have a negative impact.[4]While aid has contributed to the economic development of recipient countries, dependency on aid creates various problems.[2]Aid dependence constitutes a barrier to sustainable development in recipient countries.[5] Aid dependence weakens countries ability of planning good strategies to develop economy, hurt counties' autonomy and make countries difficult to plan long-term economic development programs.[2]
Weaken self-development capabilities
[edit]Aid dependence makes countries reluctant to advance their economic. Nationals are unwilling to participate in commercial production work. The government is also unwilling to introduce policies to encourage economic development.[2] Aid dependence has reduced the government's incentive to adopt good policies, and massive flow of project aid overwhelm the government's management capacity. Thus the country enters into a vicious circle of seeking assistance and rejecting self-development.[6] On the African continent, there has been a phenomenon of hefty flow of aid but low economic growth.[7] Whether it is intentional or unintentional use of aid, which is a long-term strategy that hinders development and reform. Recipient countries may lose production capacity due to long-term assistance.This is an example in Haiti, which is dependent on importing over 80% of grain from US even after aid period.[5]
Loss of policy autonomy
[edit]Governments that rely on aid may lose space to design and implement their own local development policies. The direct impact is a policy that donors may insist on requiring recipient countries to prioritize the implementation of donors. The indirect effect is that countries are busy in dealing with donor-provided schemes so that they fail to develop their own alternative policies, which distort the budget that the government should have given to a particular sector. As a result, state affairs have been interfered by other countries and lost autonomy.[2] The political participation of the donor countries will lead to a decline in the governance capacity of the recipient governments, and the government will be responsible for donor rather than public, which will greatly damage the national sovereignty.[8]
The volatility of aid flows
[edit]There is a huge gap between actual aid and commitment, the recipient country may not get the amount of aid that they expect to receive, which makes it difficult for countries and their citizens to plan long-term and sustainable spending. [2]Also, donor payment procedures can be cumbersome, and even if funds are in place, there may be long-term and unpredictable lags before the government can use them.[7] International aid is highly uncertain and unstable compared to foreign direct investment and domestic revenue. The instability and unpredictability make aid-dependent countries unable to cope with large-scale external shocks, which makes the country's economy at high risk.[9]
The most aid dependent country
[edit]The table below shows the most 10 aid dependent countries. Many of aid dependent countries are small islands, and their economic development is limited by the lack of natural resources, the economic development hindered by structural problems which cause the aid dependent. Many of the most aid dependent countries have experienced shocks such as natural disasters or wars which cause aid dependent. The problem of aid dependence in low-income countries is much more serious than in other countries.[2]
| country | Net ODA received (% of GNI) |
|---|---|
| South Sudan | 64.4 |
| Tuvalu | 45.3 |
| Marshall Islands | 26.9 |
| Central African Republic | 26.0 |
| Micronesia, Fed. Sts. | 25.1 |
| Somalia | 25.1 |
| Malawi | 24.6 |
| Kiribati | 21.2 |
| Liberia | 20.8 |
| Afghanistan | 19.4 |
Causes of aid dependence
[edit]Aid dependence is influenced by many factors, mainly the strength and length of aid. Long-term, large-scale acceptance of aid is more likely to generate aid dependence.[5] The degree of aid dependence is positively related to the length of time to receive aid. When the country receives aid for a long time, the degree of aid dependence is generally high. In addition, The intensity of aid is directly proportional to aid dependence. Once the proportion of aid to its GDP reaches a relatively high level, it will be difficult to fall back. It is difficult to avoid aid.[3] The root cause of aid dependency is more complicated.
The underdeveloped economy
[edit]The poor economy is one of the reasons for receiving aid. For a long time, the backward infrastructure is not enough to support domestic industrial construction, the lacking the skills and talents that can support their own development also restrict the progress of economy. Therefore, the recipient countries are always in a passive position in aid projects. They can only passively accept the proposals proposed by the donor countries, and cannot build an economic system based on their national conditions and needs.[3]In this case, untargeted aid led to low aid efficiency and did not solve the underlying problem.[2]
The weak politic system
[edit]In the case of poor rule of law and low level of governance, some developing countries have adopted a democratic political system, but the regular replacement of the government has led to the lack of continuity and stability of development policies. The core issue considered by those in power is how to maintain political power and how to maintain interests during their tenure. In order to achieve these goals, they must maintain the status quo and gain more political support; this type of government widely publicizes the amount of international aid, in order to prove its ability to obtain external assistance, and hopes voters believe in their ability to govern; at the same time they are more inclined to use foreign aid as the capital to squander and bribe voters. Such governments often regard the role of aid in economics and nation building as a secondary goal. In this case, aid tends to increase the level of corruption in recipient countries.[3]
The interests of aid donors and "aid colonialism"
[edit]Aid industry was accused of forming a new type of colonialism in which the western development and progressive ideas are used to lead and control aid-received government. The donor countries' aid to recipient countries is always mixed with their political or economic consideration. They will not help those industries that may pose threats and competitions to the domestic industry of the donor country, but often arrange assistance activities according to the needs of their industrial development, when assisting certain industries in other countries can bring convenience to economic progress of donor country.[11] When multiple aid agencies find that an aid area is not in their interests, even if the recipient country is in urgent need, it may be unattended, such as infrastructure construction; and in areas that are in their interest, there would be assistance from multiple countries or institutions. The phenomenon of repeated investment and over-investment happened.[3]
Ignore the actual situation
[edit]Adopting a unified approach often overlooks the consideration of local culture, religion, and social background. Recipient countries lack the basis for implementing these aid programs, in which case aid does not produce satisfactory results, but instead creates aid dependency problems. For example, in Mozambique, policies for the integrated management of sexually transmitted diseases are promoted, but the lack of skills and talents needed for such policies requires long-term foreign aid for the project.[5]
History and current situation
[edit]
The chart in the right shows how aid dependency change after 2000. After 20 years of continuous rising, the degree of aid dependency in low-income countries has fallen dramatically over the past 20 years, and has fallen below 10% since 2008. At present, only a small number of countries have a level of aid dependence that will affect their economic development.[2]
In the 1980s and 1990s, most low-income countries were hit by rising oil prices, falling commodity exports, and weak policies. When economic development stagnated, aid dependence rose. However,many people's income, budgetary income and expenditure have experienced rapid growth since 1995. Since then, although the absolute rate of aid has been increasing rapidly, aid dependence has fallen sharply. Since 2000, aid flows have tripled, but the degree of aid dependency is still decreasing because although aid has been growing, economic improvement is much faster.[2]
Aid dependency reduction
[edit]
The problem of aid dependence has not only external factors such as bad motivations of donor countries, the lack of cooperation among aid agencies, but also the internal reasons of the recipient countries' own political and economic systems, technological level and management capabilities. Donor countries and institutions cannot shirk their responsibility for eliminating aid dependence. Providing assistance not only depends on its own conditions, but also needs to fully consider the political, economic and social conditions of the recipient countries, and to help the recipients to enhance their sustainable development capabilities. The elimination of aid dependence requires improvements from both parties.[3] If aid is given to support poor countries to lead their own development, to be more responsive to their own people, and to mobilize more of their own resources, then aid itself can help reduce dependence on aid.[2]
Dominance in aid
[edit]In the long run, sustainable development can only be achieved when aid recipients lead aid instead of aid donors.[12] It is clear that programs and projects that dominate by recipient countries are more effective. Aid funds should be designated as a recipient government budget rather than allocated to special industries by donors, as it reduces donor participation.[13] For example, Botswana largely determines the direction and use of funds; identifies priority industries and screens donors accordingly, thereby avoiding the idea of relying on donors. Implement only projects that are expected to be within government capacity, making development sustainable in the long run.[5]
Generate other development finance
[edit]recipient countries can use aid funds to develop the economy rather than consumption, making development sustainable rather than a one-off. Develop other forms of financing through aid funds, increase government taxation, improve the social and economic system. Increasing domestic saving and investment rather than relying on foreign aid and foreign direct investment. Reduce aid dependence by increasing Gross National Income.[2]
increase aid effectiveness
[edit]Increased aid effectiveness, make the aid fund more valuable is a good way to reduce aid dependence.[2] Paris Declaration and Accra Agenda for Action demonstrated the fundamental principle to make aid more effective.[14] transparency and accountability are significant elements to improve the quality of aid and its impact on development.[15] By increasing transparency, donors and recipients can be responsible for the money they spend and increase aid efficiency.[16] Increased accountability to donors and recipients is beneficial to improve aid outcomes and make expenditure more standardized and reasonable, thus reducing long-term dependence. At the same time, optimized information disclosure system ensures the use of aid funds transparent, which is conducive to reducing corruption and improving aid efficiency.[2]
Provide real aid
[edit]The aid provided by the donor country should not only proceed from its own conditions, but also fully consider the political, economic and social conditions of the recipient country, and proceed from the ability of the recipients to enhance their sustainable development. Aid should focus on strengthening the self-development ability of the recipient countries and provide assistance according to the needs of the recipient countries.[3] Aid funds should be used to help recipient countries complete their development program, thereby reducing aid dependence.[2]
references
[edit]- ^ Sobhan, Rehman. (2000). Aid Dependence and Donor Policy: The Case of Tanzania with Lessons from Bangladesh's Experience. University Press Ltd. ISBN 9840513362. OCLC 768307584.
- ^ a b c d e f g h i j k l m n o p Thomas, Anna; Viciani, Lacopo; Tench, Jonathan; Sharpe, Rachel; Hall, Melissa; Martin, Matthew; Watts, Richard (2011). Real Aid: Ending Aid Dependency. ActionAid. pp. 17–36.
- ^ a b c d e f g Sun, Tongquan (2008). "国际发展援助中"援助依赖"的成因". International Economic Cooperation.
- ^ Clemens, Michael A.; Radelet, Steven; Bhavnani, Rikhil R.; Bazzi, Samuel (2011-12-01). "Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth". The Economic Journal. 122 (561): 590–617. doi:10.1111/j.1468-0297.2011.02482.x. ISSN 0013-0133.
- ^ a b c d e "Aid Dependency: The Damage of Donation". This Week in Global Health. Retrieved 2019-05-12.
- ^ Lancaster, Carol. (2000). Managing a smooth transition from aid dependence in Africa. Overseas Development Council. ISBN 1565170326. OCLC 45121683.
- ^ a b Collier, P (1999-12-01). "Aid 'dependency': a critique". Journal of African Economies. 8 (4): 528–545. doi:10.1093/jae/8.4.528. ISSN 0963-8024.
- ^ Bräutigam, Deborah A.; Knack, Stephen (2004). "Foreign Aid, Institutions, and Governance in Sub‐Saharan Africa". Economic Development and Cultural Change. 52 (2): 255–285. doi:10.1086/380592. ISSN 0013-0079.
{{cite journal}}: no-break space character in|first=at position 8 (help) - ^ Bulíř, Aleš; Hamann, A. Javier (2008). "Volatility of Development Aid: From the Frying Pan into the Fire?". World Development. 36 (10): 2048–2066. doi:10.1016/j.worlddev.2007.02.019. ISSN 0305-750X.
- ^ a b "Net ODA received (% of GNI) | Data". data.worldbank.org. Retrieved 2019-04-11.
- ^ Morgenthau, Hans (1962). "A Political Theory of Foreign Aid". American Political Science Review. 56 (02): 301–309. doi:10.2307/1952366. ISSN 0003-0554.
- ^ Wade, Robert (2018-06-05). Governing the Market. Princeton University Press. ISBN 9780691187181.
- ^ Moss, Todd J.; Pettersson, Gunilla; van de Walle, Nicolas (2006). "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa". SSRN Electronic Journal. doi:10.2139/ssrn.860826. ISSN 1556-5068.
- ^ "Paris Declaration and Accra Agenda for Action - OECD". www.oecd.org. Retrieved 2019-05-31.
- ^ "Accra Agenda for Action". 2008-09-04. doi:10.1787/9789264098107-en.
{{cite journal}}: Cite journal requires|journal=(help) - ^ McGee, Rosemary (2010). "Annex 5: Aid Transparency – Review of Impact and Effectiveness of Transparency and Accountability Initiatives". SSRN Electronic Journal. doi:10.2139/ssrn.2188159. ISSN 1556-5068.
Category:International development Category:International development in Africa Category:Aid